Reports of forced labor camps – not unlike those widely used by the Nazi regime throughout the Second World War – in the Xinjiang region of China have become increasingly widespread in recent years. Images from these detention camps and reports coming out of the region indicate that the Chinese government has detained approximately one-million Uighurs, a Muslim minority living primarily in the Northwestern region of China, since 2018. Although Chinese officials insist that these camps are mere vocational-training camps aimed at eradicating violent extremism among the Muslim population, the United States and other foreign entities remain unconvinced.
After months of President Trump refusing to acknowledge the human rights violations taking place within these labor camps, opting instead to preserve favorable trade relations with the Chinese government, his administration has finally adopted a new approach marked by sanctions, memos, and Withhold Release Orders (WRO). Likely sparked by a downturn in trade relations with China, President Trump and his senior officials, including Secretary of State Mike Pompeo, now have taken to the media to publicly condemn the Chinese government for its mistreatment of the Uighur population, warning CEOs of U.S. corporations to “be aware of the reputation, economic and legal risks of supporting such assaults on human dignity.”
The Trump administration, however, has gone much further than mere public statements. Three recent developments stand out. First, the Commerce, Treasury, Homeland Security, and State departments released a (nonbinding) nineteen-page memo urging U.S. companies to refrain from sourcing goods traceable to human-rights abuses in the Xinjian region. Second, the Treasury and State departments imposed sanctions on senior officials in China’s Xinjiang region for their roles in the state-sponsored violence under the Uyghur Human Rights Policy Act of 2020. And third, most recently, the U.S. Customs and Border Protection (CBP) issued five WROs on goods and materials produced in labor and mass detention camps in the Xinjiang region. Mark A. Morgan, the Acting CBP Commissioner, urges the public to view these WROs as a “clear message … that [the U.S.] will not tolerate the illicit, inhumane, and exploitative practices of forced labor in U.S. supply chains.”
Mr. Morgan is entirely correct to presume that the effects of these WROs will implicate U.S. corporations’ supply chains. In fact, because the Xinjiang region produces approximately 85% of all cotton produced in China, those companies forced – for legal and/or reputational reasons – to find suppliers elsewhere will see their global supply chains greatly disrupted. This possibility has only become increasingly likely as several prominent, international auditors have released statements that they will no longer provide labor-audit or inspection services in the Xinjiang region.
With international concern mounting in response to global media coverage of these forced labor and mass detention camps, companies who source materials from Xinjiang, like Gap Inc. and Kraft Heinz Co., find themselves facing a serious dilemma. Ethical, legal, and public relations considerations weigh in favor of, at the very least, not sourcing materials from forced labor camps in Xinjiang. However, the economic effects of such production upheaval and redirection could harm or even bankrupt some companies. It remains to be seen how many of these multinational enterprises will respond to this growing public pressure.